The co-chairs of an electric service study committee in the North Carolina legislature, Senator David Hoyle and Representative Ronald Smith, have proposed a draft bill that will streamline the approval process for merchant power plants. The bill eliminates certain reporting requirements for merchant plants applying for approval to build facilities and modifies the standard used to review merchant plant applications and thereby stream-lines the development process for generation facilities.
North Carolina law currently requires any entity intending to construct an electric generation facility to first obtain from the North Carolina Utilities Commission (the "Commission") a certificate of public convenience and necessity. Anyone constructing an electricity generating facility to be used primarily for the constructor’s own use and not primarily for sale to or for the public is exempt from this requirement. Despite being exempt, such self-generators must notify the Commission of the construction of the facility prior to the commencement of construction.
Also under current North Carolina law, the Commission must apply a certain criteria when examining any application for a certificate of public convenience and necessity. Before issuing a certificate, the Commission must determine that the public convenience and necessity require, or will require, the construction of the proposed electric generation facility. To make this determination, the Commission must develop a plan addressing the long-range needs for electric generation facility expansion in North Carolina. When presented with an application for a certificate, the Commission must find that construction of the new facility is consistent with this plan.
The current North Carolina law further requires that, when acting upon an application for a certificate of public convenience and necessity, the Commission must consider the applicant’s power transfer arrangements and certain other criteria. Specifically, the Commission is required to consider arrangements between the applicant and other electric utilities for interchange of power, the pooling of plant, and power purchases. The Commission must also consider "other methods for providing reliable, efficient and economical electric service." In addition, the Commission must approve estimated construction costs for the facility and conduct an on-going review of the construction.
The proposed legislation would establish the application of different criteria for electric generation facilities not subject to rate-setting by the Commission. The draft bill leaves in place the existing criteria for non-merchant power plants. Under the proposed legislation, merchant plants are not subject to the requirement that the proposed plant be consistent with the electric generation expansion plan. Under the draft bill, however, if the Commission determines that consideration of the electric generation expansion plan "is in the public interest," the plan may nonetheless apply. Moreover, the draft bill specifies that the requirement to demonstrate the need for a merchant plant "need not be demonstrated by a specific local need or contract to supply electricity," but rather states the "need for such a generating facility may be demonstrated by expected regional growth in the use of electricity."
Under the draft bill, merchant plants are not subject to the provision of the existing law requiring the Commission to consider the power transfer arrangements for the facility in acting on the application for a certificate of public convenience and necessity. The draft bill also eliminates the requirement that the Commission evaluate the reliability, efficiency, and economical nature of the facility. The requirement for the commission to conduct an ongoing review of construction and of the developer to submit construction cost estimates, construction progress reports, and revisions of construction cost estimates is also eliminated for merchant plants under the proposed legislation. The draft bill also eliminates the requirement for a public hearing on the merchant plant’s application. While the proposed legislation initially exempts merchant plants from each of these requirements, the Commission may nonetheless apply these requirements if it finds that "the application of those subsections is in the public interest."
The study committee is expected to meet on January 23rd to consider the proposed legislation.